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# What is life insurance?

Life insurance is a contract between an individual and an insurance company, under which the individual pays regular premiums in exchange for a financial payout to the named beneficiaries upon their death.

The policyholder can designate one or more beneficiaries (for example their children and/or spouse).

The aim of life insurance is to provide financial protection for the insured person’s dependants, by guaranteeing them a source of income if the insured person dies.

Life insurance can also be advantageous for tax purposes, as the premiums you pay can be deducted from your taxable income, which reduces the tax you have to pay.

There is a cap on the deduction of insurance premiums: **€672 per year for each member of the tax household** (taxpayer, spouse or partner, children). This cap applies to all eligible insurance premiums combined (health, life, accident, etc.). Because it is calculated **per person**, the total deductible amount is higher for couples taxed jointly and for families with children. For example, the cap is €1,344 for two adults, plus €672 for each child.